Delta obtained slots for the LaGuardia hub through a swap with US Airways nearly a decade ago in which Delta exchanged some of its slots at Washington’s Reagan National Airport for the slots at LaGuardia. US Airways later merged with American Airlines.
The Friday filing by Delta and WestJet called the requirement that they divest slots at LaGuardia the “most onerous” of the conditions, which they said are “unreasonable and unacceptable.”
They said divesting the slots would not address any reduction of competition resulting from the joint venture, which would have allowed them to coordinate on schedules and pricing on flights between the U.S. and Canada, and that the Canadian Competition Bureau reviewed the deal without imposing such conditions.
The DOT raised concerns about a potential reduction in competition on New York-Toronto flights, which is the largest U.S.-Canada trans-border market and the second-largest international air travel market from the U.S.
While airlines’ flight schedules have been cut this year due to the effects of the COVID-19 pandemic, over the long term the slot system limits the ability of airlines to expand at LaGuardia.
Delta controls 45% of the market at LaGuardia, which it said is less than the share dominant hub carriers have at other hub airports.
According to the filing by Delta and WestJet, divesting the slots at LaGuardia would force the carriers “to sell these strategic corporate assets during a global pandemic that has inflicted an unprecedented crisis on this industry, virtually ensuring that they would be sold at a fire sale price far below their long-term economic value.”
The DOT also proposed that WestJet’s ultra low-cost subsidiary Swoop and its parent company be carved out of the deal, and that WestJet grant interline partnerships with other U.S. airlines on request. WestJet and Delta said such remedies were not imposed on a joint venture between United Airlines and Air Canada.
Delta and WestJet said they “are unwilling to accept these conditions” and therefore withdrew their application and asked the DOT to close the docket.
Delta issued a statement saying it will not implement the joint venture with WestJet, but that the two carriers “remain committed to their partnership and will explore alternative options to deepen their alliance cooperation.”